Mortgage Calculator
Estimate your monthly mortgage payment — including property tax and insurance — and see exactly how much interest you'll pay over the life of the loan.
How your mortgage payment is calculated
Your monthly principal-and-interest payment uses the standard amortization formula: M = P × r ÷ (1 − (1 + r)−n), where P is the loan amount (price minus down payment), r is the monthly interest rate, and n is the number of monthly payments. Early payments are mostly interest; over time, an increasing share goes to principal — the schedule above shows that shift year by year.
What lenders look at
Most lenders want your total housing cost (payment, tax, insurance, and heating) below roughly 28–32% of gross monthly income, and total debt payments below about 36–44%. A 20% down payment typically lets you avoid mortgage default insurance (CMHC in Canada, PMI in the US), which otherwise adds to your monthly cost.
Tips that save real money
- Shorter term: a 20-year term instead of 30 dramatically cuts total interest, at the cost of a higher monthly payment.
- Rate shopping: even 0.25% off the rate on a $400,000 loan saves roughly $20,000+ over 25 years.
- Extra payments: most mortgages allow annual prepayments that go 100% to principal.
A worked example
Take a $450,000 home with 20% down — a $360,000 mortgage over 25 years. Here's what the interest rate alone does to the monthly payment and to the total interest paid over the full term:
| Rate | Monthly (P&I) | Total interest over 25 years |
|---|---|---|
| 5.5% | $2,210.71 | $303,214 |
| 6.0% | $2,319.49 | $335,846 |
| 6.5% | $2,430.75 | $369,224 |
| 7.0% | $2,544.41 | $403,322 |
Half a percentage point — the difference between 6.0% and 6.5% — costs about $111 a month, but roughly $33,000 over the life of the loan. That's why shopping three lenders is worth a few hours of your time, and why a mortgage broker's fee can pay for itself several times over.
The amortization trap: 25 vs 30 years
At 6.5% on that same $360,000, stretching from 25 to 30 years drops the payment from $2,430.75 to $2,275.44 — about $155 a month cheaper, which is genuinely tempting when you're stretching to qualify. But total interest climbs from $369,224 to $459,160. You pay roughly $90,000 extra to save $155 a month.
Toggle the term in the calculator above and watch the "Total interest paid" figure. If the shorter term is affordable, take it; if it isn't, the longer term with prepayments when you can afford them is a reasonable compromise.
Mistakes that cost people money
- Budgeting on principal and interest alone. Property tax, insurance, and — for condos — monthly fees are real money. This calculator includes tax and insurance for exactly that reason.
- Forgetting closing costs. Land transfer tax, legal fees, title insurance and inspection typically add 1.5–4% of the purchase price, due in cash on closing.
- Maxing out the approval. Lenders approve you on gross income; you live on net. An approval is a ceiling, not a target.
- Ignoring the renewal. In Canada, a 5-year term on a 25-year amortization means renewing at unknown future rates four more times. Stress-test your budget against a rate two points higher.